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Going digital – what it means for the future of work?

By Matt Leach - on 04/11/2015

On Tuesday, I spend an amazing few hours at Digital First 2.0, the joint Halton Housing Trust/Connected Homes Consortium unconference on the future of housing technology

Over a hundred housing professionals spanning everything from asset management to community engagement came together for a day of hands-on engagement with a select group of technology pioneers, ranging from big players like O2 Telefonica, British Gas Hive and Aareon through to start ups like Switcheeand Blue Maestro. The aim was to start to map out how new technologies – and in particular what has become known as the Internet of Things would transform housing businesses, and in the very near future.

It wasn’t an event full of talking heads and tedious PowerPoint, or expensive stands trying to hard sell to reluctant buyers. Indeed a lot of the technology we got early glimpses of yesterday may not be on the market until next year or beyond. What did take place was an incredibly energised, exciting and inspirational conversation about the potential offered to UK housing by new and connected technologies. And in particular how it can help deliver – and indeed will shape - solutions to many of the massive business challenges facing housing providers as a result of July budget and its aftermath. It’s a space that is of massive importance to the sector’s future, and one that HACT and the Connected Homes Consortium will be returning to later this year, and through 2016.

Later that day, I spoke at an equally compelling event – an expert panel on the future of work convened by the Institute for Economic Development. What became clear over the course of that debate was the extent to which the issues facing tomorrow’s workforce are inextricably linked to the themes underpinning Digital First. Because the opportunities and challenges posed for housing providers by the current technological revolution don’t start and finish with the smart home appliances we may all be installing in residents’ homes over the next 3-4 years.

New and rapidly emerging technologies are poised to drive significant structural shifts in the wider economy, and will have a profound impact on the the lives of our tenants, and in particular their ability to find work, pay for services and indeed afford to rent or buy their homes. At the same time, it looks likely that it will fundamentally shift the terms of the debate on the welfare safety net, as technology-led disruption of many long held assumptions about the very future of some areas of the workplace starts to bite as we enter the coming decade. And in a sector that is painfully aware of how exposed it remains to changes in welfare policy, we need to start to think about what that might mean now.

It is worth starting by focusing on those housing providers house. Regardless of any move towards market rent and sale, or gradual growth in Right to Buy, it is an inescapable fact that – for the foreseeable future – our tenant group will continue to be made up, predominantly, by those falling into amongst poorer socio-economic groups. Often those on edges of the labour market. In fact, if you look at where most social housing is located, it remains fairly easy to overlay them with pockets of deprivation and worklessness, whether in more deprived communities or indeed in jobs-rich cities like London.

And – despite cutbacks - housing associations continue to invest huge amounts in getting people into work. Its partly social mission – housing associations are values-driven organisations who will work hard to turn round the lives of those of our tenant base who need most help. But, increasingly, housing providers are justifying that investment in part because of a desire to derisk income streams, and – over time - make their businesses less reliant on what are likely to be continued changes in government welfare policy.

A lot of that work – inevitably - is focused on getting people into entry level jobs. Where they succeed, a disproportionate number of those entry level jobs will be in low skill, relatively accessible areas like retail, catering, cleaning, driving, security. The functional chore-based jobs that help make modern cities function. But we don’t have to look far into the future to see where many of those jobs are going.

If those jobs are disappearing, what are we preparing people for? At last night’s event, a few panelists assured the audience that low level jobs would be replaced in equal or greater numbers by new, high skill, high wage freelance roles. Or maybe by people selling stuff on Etsy. Are there really sufficient creative and service sector jobs out there to absorb the numbers of low skilled at the edge of an already precarious employment marketplace? The evidence seems to suggest that if there is any growth in self employment, it is at the lower end of the income spectrum, defined by below minimum wage employment and work starvation not MacBook Pros and Shoreditch lattes.

Of course its not just the low skilled jobs that are going. At that Manchester conference we were all getting excited by the Internet of Things. Boilers coming onto the market next year that will self-report problems, so that you only need to send a semi-skilled engineer out with the right part once. Leak sensors with ten-year battery life, meaning you don’t have to employ surveyors to inspect roof spaces any more. Predictive maintenance reducing the need for redundant capacity in maintenance workforces. All of it likely to be vital to the organisational and financial future of housing providers as income is squeezed. But most of it delivering its impact by reducing the need for low skill jobs, whilst deskilling those medium level jobs that remain.

And – for all of the excitement about the limitless possibilities opened up by new and emerging technologies - it is impact technological change will have on our welfare and the wider economy that should be focusing out minds most. All industrial revolutions - and we are going through one now - bring with them pain and dislocation, as old jobs are displaced and new ones take their place. People get hurt, but eventually they find a way to exist within the new work/tech paradigm. It is sobering to read the 2014 Deloitte report on future job prospects beyond 2025. It suggests as many as 50% of jobs at medium or high risk of displacement by technology over the next 15 years.

Of course not all jobs go for good when industrial revolutions take place. Many are replaced by new opportunities opened up by greater productivity, and more effective deployment of labour and capital. But previous industrial revolutions have taken place over decades, giving time for people to adapt, shift and retrain. We are currently in an ever accelerating and never ending revolution in which successive waves of innovation drive bigger changes over ever shorter periods – what Vivek Wadwha has called the “great acceleration” which threatens to leave some in a place where they can never catch up.

It’s a revolution that threatens to happen too fast for institutions – whether government or traditional businesses – to respond, or for individuals to process and understand. It is likely to bring – over the next decade - a step change in social and economic challenges, but at a pace which may be too fast for us to manage. For example, how do we start to conceive of and construct the scale of safety net that may be needed to ensure those displaced from the labour market are able to get by, given we are starting from a position of largely short termist politics, in which all the momentum behind welfare is in the other direction.

Longer term, there is an even bigger challenge. As technology squeezes people out of the value chain - and its different now - prior to this revolution, tech provided people with better tools; this revolution is removing the need for people to operate them - we are likely to see (arguably we are already seeing) increasing concentrations of wealth in a very few who own productive, wealth generating capacity, and a gradual but accelerating decrease in the spending power of the wider population. That is only sustainable up to a point, before we start to encounter what risks emerging as the big economic crisis of the 2020s, one of demand. With almost unlimited capacity to produce, but insufficiently distributed ability to consume sufficiently for the economy to continue to function effectively.

Its one of the drivers of increasing debate in other developed economies - whether the US, Switzerland or the Netherlands - about the emerging need to at least engage with the notion of a basic income. Interestingly, the most compelling cases being made not by left wing agitators campaigning for equitable wealth distribution but by mainstream economists worried about where we go next. If that debate emerges in the UK, as I’ve blogged on in the past, it is likely to have a profound impact on discussion of the nature of work, the role of employment and the place of welfare in society.

From a housing point of view, its interesting to see how our own pursuit of efficiency through technology in order to cope with changes in today’s welfare regime may be - in a small way - driving the fundamental rethink of welfare and wealth distribution that is inevitably coming down the line.